[Federal Register: July 7, 1997 (Volume 62, Number 129)]
[Rules and Regulations]
[Page 36205-36212]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jy97-4]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 285
RIN 1510-AA58
Collection of Past-Due Support by Administrative Offset
AGENCY: Financial Management Service, Fiscal Service, Treasury.
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Debt Collection Improvement Act of 1996 (DCIA), enacted on
April 26, 1996, authorizes the Secretary of the Treasury (Secretary) to
collect past-due support by the administrative offset of Federal
payments. Executive Order 13019 of September 28, 1996 (Executive Order)
requires that the Secretary promptly develop and implement procedures
necessary for the collection of past-due support debts by
administrative offset. In addition, the Executive Order requires each
executive agency to review each class of payments certified by such
agencies to determine whether any class of payments should be exempt
from offset. With respect to any class of payments so identified,
agencies must submit a request for exemption from offset to the
Secretary within 30 days after the Secretary establishes standards for
determining exemptions. The Executive Order further requires that
Federal payment agencies and disbursing officials promptly implement
any rules, regulations, or procedures issued by the Secretary that are
necessary to implement offset for the collection of past-due support.
The Financial Management Service (FMS), as the central disbursing
agency of the Federal Government, is
[[Page 36206]]
responsible for implementation of centralized administrative offset for
the collection of nontax delinquent debt owed to the Federal
Government, past-due support, and other debt owed to States. This
regulation implements administrative offset for the collection of past-
due support pursuant to the DCIA and the Executive Order.
As authorized by the DCIA, FMS intends to promulgate additional
rules for centralized administrative offset for the collection of
nontax debt owed to Federal and State Governments, other than child
support. FMS anticipates that Part 285 will eventually contain all of
the provisions relating to centralized administrative offset.
DATES: This rule is effective on July 25, 1997. Comments will be
accepted until September 5, 1997.
ADDRESSES: Comments or inquiries may be mailed to Gerry Isenberg,
Financial Program Specialist, Debt Management Services, Financial
Management Service, Department of the Treasury, 401 14th Street SW.,
Room 151, Washington, DC 20227. A copy of this interim rule is being
made available for downloading from the Financial Management Service
web site at the following address: http://www.fms.treas.gov.
FOR FURTHER INFORMATION CONTACT: Gerry Isenberg, Financial Program
Specialist, at (202) 874-6660; Pamela Dillon, Director, Treasury Offset
Program, at (202) 874-8700; Ellen Neubauer or Ronda Kent, Senior
Attorneys, at (202) 874-6680.
SUPPLEMENTARY INFORMATION:
Background
The Debt Collection Improvement Act of 1996 (DCIA), Pub. L. 104-
134, 110 Stat. 1321-358 (1996), requires that disbursing officials of
the Department of the Treasury and other Federal disbursing officials
offset Federal payments to collect nontax delinquent debts owed to the
United States. Subsection (h) of 31 U.S.C. 3716, as added by section
31001(f) of the DCIA, authorizes the Secretary of the Treasury
(Secretary) to collect State debts, including past-due support, by the
administrative offset of Federal payments. See also section
31001(z)(1)(B) of the DCIA, codified at 31 U.S.C. 3701(b)(2).
FMS, as the Treasury disbursing office, is responsible for
implementation of centralized administrative offset for the collection
of nontax debt owed to the United States, past-due support, and other
State debt. On September 28, 1996, the President issued Executive Order
13019 entitled ``Supporting Families: Collecting Delinquent Child
Support Obligations'' (Executive Order) which requires that the
Secretary promptly develop and implement procedures necessary to
collect past-due support debts by administrative offset. The Executive
Order recognizes that the failure of some parents to meet their child
support obligations threatens the health, education, and well-being of
their children and requires the collection of delinquent child support
obligations from persons who may be entitled or eligible to receive
certain Federal payments. FMS is publishing this interim regulation to
establish and notify the public of the procedures necessary for the
collection of past-due support debts by administrative offset in
accordance with 31 U.S.C. 3716(h) and the Executive Order.
Federal law prohibits the use of administrative offset to collect
State debts (including past-due support) for many types of Federal
payments, including payments due to an individual under (a) title IV of
the Higher Education Act of 1965; (b) the Social Security Act; (c) part
B of the Black Lung Benefits Act; (d) any law administered by the
Railroad Retirement Board; (e) the tariff laws of the United States;
and (f) any other law that expressly prohibits collection of past-due
support by administrative offset. Regulations promulgated by the
Internal Revenue Service and the Department of Health and Human
Services (HHS) govern the offsetting of Federal tax refund payments to
collect past due child support as authorized under 26 U.S.C. 6402 and
42 U.S.C. 664. See 26 CFR 301.6402-5 and 45 CFR 303.72. FMS will be
responsible for operation of the tax refund offset program effective
January 1, 1998, and will issue new regulations governing the offset of
tax refund payments to collect past-due support.
To implement the Executive Order and 31 U.S.C. 3716(h), FMS is
working with HHS, Treasury and non-Treasury disbursing officials, and
other affected agencies, including Federal payment agencies. The
Executive Order requires that disbursing officials (officials
authorized to disburse Federal payments) and payment agencies (agencies
that certify Federal payments) promptly implement any rule, regulation,
or procedure necessary to conduct administrative offset to collect
delinquent child support payments.
Subsection (c)(3)(B) of 31 U.S.C. 3716, as added by section
31001(d)(2)(D) of the DCIA, requires the Secretary to exempt payments
under means-tested programs from administrative offset when requested
by the head of the respective agency. In addition, this subsection
authorizes the Secretary to exempt other payments from administrative
offset upon the written request of the head of the payment certifying
agency. The written request for exemption must provide justification
for the exemption. Standards and instructions for making such requests
are available from FMS at the above address and at the FMS web site at
www.fms.treas.gov. The Executive Order requires that Federal payment
agencies determine the classes and types of payments that should be
considered for exemption from administrative offset by the Secretary
and submit requests for exemption to FMS within 30 days of the date the
Secretary prescribes standards. In acting on such requests, the
Secretary will give due consideration to whether administrative offset
would tend to interfere substantially with or defeat the purposes of
the payment agency's program. The DCIA requires that the Secretary
report to the Congress annually on exemptions granted under the DCIA.
FMS is working closely with HHS to implement procedures necessary
to report to the Secretary information on past-due support claims
referred to HHS by States for tax refund offset purposes under 42
U.S.C. 664 and 26 U.S.C. 6402(c), including claims enforced by States
pursuant to cooperative agreements with or by Indian tribal
governments. Such procedures are appropriate to facilitate offset and
prevent duplicative efforts by the States. FMS is also working closely
with HHS to implement procedures necessary to report to the Secretary
information on past-due support claims referred to HHS by States under
this rule. It is anticipated that States will continue to refer debts
to HHS for offset from both Federal tax refunds and other Federal
payments and that HHS will report those debts to the Secretary. While
nothing in this rule is intended to require States to refer debts
directly to FMS for administrative offset, this rule provides States
with that option.
``Past-due support'' means the amount of support, determined under
a court order, or an order of an administrative procedure established
under State law, for support and maintenance of a child, or of a child
and the parent with whom the child is living, which has not been paid.
States will have the option of directly notifying FMS of past-due
support for administrative offset purposes or of notifying HHS,
whereupon HHS will report those debts to FMS.
[[Page 36207]]
Before notifying FMS or HHS that an individual owes past-due
support, the State or its agents will be required to send notice to
such individual that an offset may be taken from certain Federal
payments otherwise payable to such individual. The notice shall inform
the individual owing the past-due support of the type and amount of the
support owed, as well as such individual's right to a review of the
State's determination that past-due support is owed or of the amount
owed. The State will certify that the requirements of this regulation
and applicable State law have been met.
Section by Section Analysis
(a) Definitions
Administrative Offset. Administrative offset has the same meaning
as found at 31 U.S.C. 3701(a)(1) except that as used in this rule the
term is limited to the offsetting of payments to collect past-due
support.
Debt. As used in this rule, the term ``debt'' is limited to debt
based on past-due support. Debt based on past-due support is among the
many kinds of debts subject to collection by administrative offset and
encompassed by the statutory definition of debt found at 31 U.S.C.
3701(b) (1) and (2). The definition of debt contained in this rule does
not alter the statutory definition. It merely limits the scope of the
rule to debt based on past-due support.
Disbursing Official. Disbursing official means an official who has
authority to disburse public money pursuant to 31 U.S.C. 3321 or
another law. It includes disbursing officials of the Department of the
Treasury, the Department of Defense, the United States Postal Service,
or any other Government corporation, any disbursing official of the
United States designated by the Secretary of the Treasury, or any
disbursing official of any other executive department or agency that
disburses Federal payments.
Past-Due Support. Past-due support means the amount of support
determined under a court order or an order of an administrative
procedure established under State law for support and maintenance of a
child or of a child and the parent with whom the child is living, which
has not been paid. Unless so limited by court order or under State law
or procedure, the term ``child'' as used in this definition is not
intended to be limited to minor children.
State. Treasury considered including legal subdivisions of States
within the definition of ``State'' to ensure that there were no
impediments to collecting past-due support being enforced at, for
example, the county level. Legal subdivisions of States were not
included in the definition of ``State'' because of concerns about the
potential impact on current relationships between States and their
legal subdivisions in the collection of past-due support. The public is
invited to comment on the impact of including or excluding legal
subdivisions of States in the definition of ``State'' as well as on any
other provision of this rule.
(b) General Rule
Paragraph (b) states the general rule that disbursing officials of
FMS and other disbursing officials of the Federal Government will
offset Federal payments to collect past-due support. States enforcing
past-due support may notify FMS of past-due support either by entering
into an agreement with FMS and requesting that the offset be conducted
or by notifying HHS. Amounts offset will be forwarded to the State less
any fee charged for the offset.
(c) Agreements
Paragraph (c) states that FMS may, within its discretion, enter
into an agreement with a State for disbursing officials of FMS and
other Federal disbursing officials to collect past-due support by
administrative offset. The agreement will contain requirements that FMS
considers appropriate to facilitate the offset such as the manner and
time frames for submitting debts to FMS; requirements for updating
debts; and other procedures to ensure offsets are properly made. The
agreement also will require that States have procedures in place for
collecting debt by administrative offset including procedures for
ensuring that individuals who owe past-due support are provided with
notice and an opportunity to be heard before the debt is referred to
FMS for offset. There is a strong Federal and State interest in
ensuring that parents meet their child support obligations. The failure
of some parents to meet their child support obligations weakens
families and increases State and Federal welfare expenditures. Thus,
agreements entered into between FMS and a State for the collection of
past-due support by administrative offset are of mutual benefit to both
the State and FMS and are therefore considered reciprocal. There is no
requirement that States offset their payments to collect debts owed to
the Federal Government and thus the request for offset from the State
may come from the appropriate official of the State responsible for
enforcing past-due support rather than a State disbursing official.
(d) Notification to FMS of Past-Due Support
Paragraph (d) describes the procedures which must be followed for
each debt when a State notifies FMS or HHS of past-due support for
purposes of collection by administrative offset. More specific
instructions regarding the formatting of information and the required
data elements will be provided to States.
States which are enforcing a past-due support order issued by
another State or otherwise have knowledge that another State is
involved in enforcing a particular past-due support order, are required
to inform any other State involved in enforcing the order that it has
notified FMS of the past-due support. States must also notify any other
State involved in enforcing the order of any amounts received as a
result of an offset. The purpose of this notification is to avoid
referral of the same debt from more than one State and to ensure that
debt amounts are accurately maintained.
Before a debt can be referred to FMS, States must sign a
certification for each debt or group of debts certifying that each debt
is past-due, legally enforceable, that the notice described in
paragraph (h) has been sent, and that the State has completed any
requirements imposed by its own laws or procedures for collection of
debts by administrative offset. The certifying official must have both
the knowledge and the authority to certify to FMS, on behalf of the
State, that these requirements have been met. One of the purposes of
the certification is to permit the Secretary of the Treasury, as
authorized by the DCIA, to waive certain requirements of the Computer
Matching and Privacy Protection Act of 1988, 5 U.S.C. 552a, when
applicable, upon certification by a State that the requirements of 31
U.S.C. 3716(a) have been met. Section 3716(a) of Title 31 sets forth
the due process requirements applicable to the collection of delinquent
debts owed to the Federal Government. The due process requirements
applicable to the determination and collection of past-due support are
established under State laws and procedures. Additionally, paragraph
(h) of this rule sets forth specific due process requirements States
must meet to collect past-due support under this rule. Thus,
certification of compliance with both the requirements of State laws
and procedures and the requirements of paragraph (h) of this rule will
be considered equivalent to certification of compliance with the
requirements of 31 U.S.C. 3716(a).
[[Page 36208]]
Any debts which are not properly certified or do not otherwise
comply with the requirement of this section will not be accepted by
FMS. States will be notified that a particular debt or group of debts
has been rejected and will be given the reason for the rejection. Such
debts may be submitted to FMS once any deficiencies noted have been
resolved.
(e) Minimum Amount of Past-due Support
Paragraph (e) states that FMS will not accept debts of less than
$25.00 for collection by administrative offset. If a debt is referred
to FMS which is over $25.00 at the time it is referred, the debt will
remain subject to collection by administrative offset until it is paid
in full even if it falls below the $25.00 minimum. The $25.00 minimum
is intended to ensure that FMS is not collecting debt by administrative
offset where the administrative cost of collection exceeds the amount
of the debt. The minimum amount may be adjusted either upward or
downward by FMS. States will be notified of any adjustments.
(f) Limitations
Paragraph (f) provides that a debt properly submitted to FMS for
administrative offset will remain subject to collection by offset until
it is paid in full as long as the debt remains past-due and legally
enforceable. A debt will be considered legally enforceable for purposes
of this paragraph (f) if, under applicable State law, it may lawfully
be collected by administrative offset.
(g) Notification of Changes in Status of Debt
To ensure that debts referred to FMS for collection by
administrative offset remain accurate as to their amount and that
amounts offset do not exceed the amount of the debt, paragraph (g)
requires States to notify FMS or HHS of any decreases in the amount of
a debt referred. States are also required to notify FMS or HHS if any
debt should be deleted from the debtor database either because it has
been paid in full or for any other reason. States are permitted to
notify FMS or HHS of any increases in the amount of a debt referred to
FMS as long as the State has provided proper notice to the debtor and
has complied with any other requirements of State law or procedure.
Where a debt represents an ongoing obligation and it is anticipated
that the debt will increase on a regular basis, States should ensure
that the notices sent pursuant to paragraph (h) of this regulation
include such amounts.
Under paragraph (g), States will be required to report, at
established time intervals, the total net adjustment made to the amount
of the debt if the net adjustment results in a decrease in the debt
amount. If the total net adjustment made to the debt amount during the
established time interval results in an increase in the debt amount,
States are encouraged, but are not required, to report the total net
adjustment.
(h) Advance Notification of Intent to Collect by Administrative Offset
Paragraph (h) sets forth requirements concerning the notice and
opportunity to exercise certain rights that must be provided to
individuals who owe past-due support before the debt can be referred
for collection by administrative offset. States must have procedures in
place to afford individuals who owe past-due support the opportunity
for a review as provided for under this paragraph (h) and must comply
with those procedures prior to referring a debt for collection by
administrative offset. Where a State intends to refer a debt which it
is enforcing based upon an order issued by another State, the referring
State must ensure that the individual who owes the past-due support has
the opportunity for a review by either the referring State or the State
which issued the order.
(i) Payments Subject to Offset
All Federal payments are subject to offset to collect past-due
support except those payments described in paragraph (i). Those
payments listed in paragraph (i)(1) are specifically excluded from
offset to collect past-due support by the DCIA. Paragraph (i)(2) sets
forth the authority of the Secretary under the DCIA to exempt
additional payments from offset. Payments which may be exempted from
offset under this authority are described in paragraph (k). Paragraph
(i)(3) is intended to recognize that other laws may prohibit the offset
of certain payments to collect past-due support. This exception applies
only where another law specifically and expressly prohibits offset. For
example, 38 U.S.C. 5301(a) expressly prohibits the collection of most
debt by offset from certain Veterans' benefit payments. Paragraphs
(i)(4) and (i)(5) reflect the DCIA provisions which exclude payments
made under the Internal Revenue Code and the tariff laws of the United
States from administrative offset under 31 U.S.C. 3716. Authority to
offset tax refund payments to collect past-due support is found at 42
U.S.C. 664 and 26 U.S.C. 6402 and is governed by regulations at 45 CFR
303.72 and 26 CFR 301.6402-5. All other Federal payments are subject to
offset under this rule although restrictions may apply to limit the
amount of a particular payment which may be offset.
(j) Special Provisions Applicable to Federal Salary Payments
Federal salary payments are included in those payments subject to
offset to collect past-due support under 31 U.S.C. 3716. The special
rules contained in paragraph (j) are intended to ensure that the amount
of a Federal salary payment subject to offset does not exceed the
limitations applicable to the garnishment of Federal pay to collect
support under 15 U.S.C. 1673(b)(2) (A) and (B). The authority to offset
Federal salary payments to collect past-due support is not intended to
alter or supersede the authority to garnish the wages of a Federal
employee who owes past-due support. Thus, this rule provides that the
maximum allowable offset amount will be reduced by the amount of a
garnishment order for support. For example, if a Federal employee's pay
in a given pay period, after required deductions, is $1,000 and 50% of
that pay may be offset, the total amount subject to offset is $500. If,
however, there is a garnishment order for support of $300 against that
employee's pay, the amount subject to offset is reduced to $200. Where
there is a $500 garnishment order against that employee's pay, no
offset would be permitted. Because Federal salary pay is being offset
to collect past-due support under 31 U.S.C. 3716, the provisions
applicable to the offset of Federal salary payments to collect debt
owed to the Federal Government do not apply.
(k) Payments Exempt From Administrative Offset to Collect Past-due
Support Being Enforced by a State
Paragraph (k) describes the authority of the Secretary as contained
in the DCIA to exempt certain payments from administrative offset.
Examples of means-tested programs as defined in paragraph (k) include
food stamps and Supplemental Security Income (SSI). Such programs are
exempt from offset so long as a request for an exemption is properly
submitted to the Secretary and the Secretary determines that such
programs are, in fact, means-tested. Other payments may be exempted
from offset at the discretion of the Secretary upon receipt of a proper
request from the agency that issues the payment which justifies the
reason for the exemption. FMS has issued standards for payment agencies
to follow when for making such requests. These standards are available
from FMS at the above address and at the FMS web site. In
[[Page 36209]]
acting on such requests, the Secretary will give due consideration to
whether or not the offset would tend to substantially interfere with
the purpose of the program.
(l) Fees
FMS will charge a fee to cover the costs of the offset.
The fee will be deducted from the amount offset before that amount
is forwarded to the States and will only be charged when an offset has
been made. States may add this fee to the amount of the debt if
permitted by law. The fee charged is intended to reimburse FMS for the
administrative costs of the offset and therefore may be adjusted to
reflect costs. Once a fee is established, however, it will not be
adjusted for a period of at least 12 months. States will be notified in
advance of any adjustments.
(m) Conducting the Offset
Paragraph (m) describes how the offset program works. Debts
referred to FMS are entered into a centralized debtor database. When
disbursing officials of the Federal Government issue payments, those
payments are compared with the debtor database to determine if the
person to whom the payment is to be issued (the payee) owes a debt. If
a match occurs (a match occurs when the taxpayer identification number
and name of the payee match the taxpayer identification number and name
of a debtor) and the payment is one which is subject to offset for the
collection of past-due support, the offset will take place. Amounts
offset will be forwarded to the State, less any fee. If the amount
offset is less than the amount of the payment, the remainder of the
payment will be forwarded to the payee. Certain payments may only be
partially offset, that is, only a certain percentage of the payment may
be offset to collect a debt. If the offset does not result in payment
of the debt in full, offsets from future payments to the payee will
continue until the debt is paid in full. Although only those debts
based on past-due support are the subject of this rule, other debts as
defined at 31 U.S.C. 3701(b) are also included in the database to be
collected by administrative offset. Separate rules govern the
collection of other debts (debts not based on past-due support) by
administrative offset.
(n) Priorities
Paragraph (n) is intended to establish a priority for offsets where
an individual owes more than one debt and a payment being issued to
that individual (or the amount of that payment which is available for
offset) is not sufficient to satisfy all debts. Debt based on past-due
support may be of more than one type depending on whether or not the
debt has been assigned to the State. Paragraph (n) provides that debt
which has been assigned to the State will be collected first and that
debt which has not been assigned to the State will be collected only
after other reductions allowed by law have been taken, such as offsets
to collect debt as defined at 31 U.S.C. 3701(b) which is owed to the
Federal Government.
(o) Notification of Offset
Paragraph (o) provides that once an offset has occurred, the
disbursing official who conducted the offset will provide notice to the
payee that the offset has occurred. A disbursing official, however,
cannot be held liable for failure to provide this notice.
(p) Liability of Disbursing Officials and Payment Agencies
Paragraph (p) restates the DCIA which provides that neither the
disbursing official nor the payment agency shall be liable for the
amount of the offset on the basis that the underlying obligation,
represented by the payment amount before the offset was taken, was not
satisfied. Thus, if a payee is due a payment and receives less than the
full amount of that payment because an offset has occurred, no cause of
action exists against the disbursing official or the payment agency on
the basis that the payment was not made in full. Paragraph (p) also
provides that the payment agency will receive notice that the offset
has occurred and will be provided with contact information at the State
which referred the debt for offset. The purpose of this notice is to
allow the payment agency to properly direct any inquiries it may
receive concerning the offset.
Regulatory Analyses
It has been determined that this rule is not a significant
regulatory action as defined in Executive Order 12866. Because no
notice of proposed rulemaking is required, the provisions of the
Regulatory Flexibility Act do not apply.
Special Analyses
FMS is promulgating this interim rule without opportunity for prior
public comment pursuant to the Administrative Procedure Act (APA), 5
U.S.C. 553, because FMS has determined, for the following reasons, that
a comment period would be impracticable and contrary to the public
interest. The DCIA was effective immediately upon its enactment on
April 26, 1996, and for the first time, authorized the collection of
past-due support by administrative offset from certain Federal
payments. Prior to the passage of the DCIA only debts owed to the
United States could be collected by administrative offset from these
Federal payments. Thus, States enforcing past-due support as well as
members of the public who either owe or are owed past-due support may
not be aware of the impact of the law.
Executive Order 13019 dated September 28, 1996 requires the
Secretary to promptly develop and implement procedures necessary for
the Secretary to collect past-due support by administrative offset. The
Executive Order states that the failure of some parents to meet their
child support obligations threatens the health, education, and well-
being of their children. It is the intent of the Executive Order to
facilitate the collection of delinquent child support obligations from
persons who may be entitled to receive certain Federal payments thereby
supporting our children and strengthening American families. Since this
interim rule provides critical guidance needed to facilitate the offset
of Federal payments to collect past-due support, FMS believes that it
is in the public interest to issue this interim rule without
opportunity for prior public comment.
The public is invited to submit comments on the interim rule which
will be taken into account before a final rule is issued.
FMS has determined that good cause exists to make this interim rule
effective upon publication without providing the 30 day period between
publication and the effective date contemplated by 5 U.S.C. 553(d). The
purpose of a delayed effective date is to afford persons affected by a
rule a reasonable time to prepare for compliance. However, in this
case, the authority to collect past-due support by administrative
offset from Federal payments became effective on April 26, 1996.
Inasmuch as this interim rule provides important guidance that is
expected to facilitate implementation of the authority contained in the
law, FMS believes that good cause exists to make the rule effective
upon publication.
Since the interim rule is being issued without prior notice and
public procedure pursuant to the APA, the collections of information
contained in the interim rule has been reviewed under the requirements
of the Paperwork Reduction Act (44 U.S.C. 3507(j)) and, pending receipt
and evaluation of public comments,
[[Page 36210]]
approved by the Office of Management and Budget (OMB) under control
number 1510-0069. An agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless it
displays a valid control number assigned by OMB.
Comments concerning the collection of information should be
directed to OMB, Attention: Desk Officer for the Department of the
Treasury, Financial Management Service, Office of Information and
Regulatory Affairs, Washington, D.C. 20503, with copies to Jacqueline
Perry, Public Reports Clearance Officer, Financial Management Service,
3361 75th Avenue, Landover, Maryland 20785. Any such comments should be
submitted not later than September 5, 1997. Comments are specifically
requested concerning:
Whether the proposed collection of information is necessary for the
proper performance of the functions of FMS, including whether the
information will have practical utility;
The accuracy of the estimated burden associated with the proposed
collection of information (see below);
How the quality, utility, and clarity of the information to be
collected may be enhanced; and
How the burden of complying with the proposed collection of
information may be minimized, including through the application of
automated collection techniques and other forms of information
technology.
The collections of information in this interim regulation are in
Sec. 285.1 (d)(1), (d)(2), (d)(3), (g), and (h). The information
collected under Sec. 285.1(d)(1) may include the name of the person
owing past-due support, the person's social security number, the
person's address, the amount of past-due support owed, and an identity
code for the State. This information is needed to determine if the
debtor and the payee of a Federal payment is the same person, to notify
the debtor/payee of the occurrence of an offset, and to forward the
money offset to the appropriate State.
The information collected under Sec. 285.1(d)(2) shall include name
and social security number of the debtor. This information is necessary
to prevent duplication of reporting to FMS.
The information collection under Sec. 285.1(d)(3) shall include a
signed statement that the debt is past-due and legally enforceable and
that the State has complied with all the requirements under
Sec. 285.1(h). This information is necessary to provide a waiver of
certain sections of the Computer Matching and Privacy Protection Act of
1988 where such a waiver is necessary to conduct administrative offset
under this rule.
The information collected under Sec. 285.1(g) may include changes
to the name of the person owing past-due support, the person's social
security number, the person's address, the amount of past-due support
owed, or the identity code for the State collecting the debt. This
information is needed to assure that the information concerning the
debtor is accurate, which prevents erroneous offsets.
The information collected under Sec. 285.1(h) shall include the
name and address of the debtor, information concerning the existence of
a past-due support debt and the intent to collect the debt by
administrative offset, and a listing of the debtor's rights. This
information is a prerequisite for conducting administrative offset
under 31 U.S.C. 3716(a).
The collections of information under this rule is voluntary. Likely
respondents to all the collections of information listed above are
States, Territories, and Commonwealths of the Federal Government.
The estimated total annual reporting burden is 5562 hours. The
estimated burden hours per respondent is 103 hours. The estimated
number of respondents is 54. These figures represent the burden imposed
by FMS. The reporting burden imposed by other agencies will be
addressed by those agencies.
List of Subjects in 31 CFR Part 285
Administrative practice and procedure, Child Support, Claims,
Debts, Privacy, Taxes.
Authority and Issuance
For the reasons set forth in the preamble, 31 CFR part 285 is
amended to read as follows:
PART 285--DEBT COLLECTION AUTHORITIES UNDER THE DEBT COLLECTION
IMPROVEMENT ACT OF 1996
1. The authority citation for part 285 is revised to read as
follows:
Authority: 26 U.S.C. 6402; 31 U.S.C. 321, 3716, 3720A; E.O.
13019.
2. Section 285.1 is added to part 285, subpart A, to read as
follows:
Sec. 285.1 Collection of past-due support by administrative offset.
(a) Definitions. For purposes of this section:
Administrative offset means withholding funds payable by the United
States (including funds payable by the United States on behalf of a
State government) to, or held by the United States for, a person to
satisfy a debt.
Debt as used in this section is synonymous with the term past-due
support.
Disbursing official includes an official who has authority to
disburse public money pursuant to 31 U.S.C. 3321 or another Federal
law.
FMS means the Financial Management Service, a bureau of the
Department of the Treasury. FMS is the designee of the Secretary of the
Treasury for all matters concerning this section, unless otherwise
specified.
HHS means the Department of Health and Human Services, Office of
Child Support Enforcement.
Past-due support means the amount of support determined under a
court order, or an order of an administrative procedure established
under State law, for support and maintenance of a child, or of a child
and the parent with whom the child is living, which has not been paid.
Past-due support being enforced by the State means there has been
an assignment of the support rights to the State or the State making
the request for offset is providing services to individuals pursuant to
42 U.S.C. 654(5) (section 454(5) of the Social Security Act).
State means the several States of the United States. The term State
also includes the District of Columbia, American Samoa, Guam, the
United States Virgin Islands, the Commonwealth of the Northern Mariana
Islands, and the Commonwealth of Puerto Rico.
Secretary means the Secretary of the Treasury.
(b) General Rule. FMS may enter into a reciprocal agreement with a
State for the collection of past-due support being enforced by the
State by administrative offset from certain Federal payments. Upon
notification of past-due support either directly from a State which has
entered into such an agreement or from HHS, disbursing officials of FMS
or any other disbursing official of the United States shall offset
Federal payments which are subject to offset under this section, to
collect past-due support. The amount offset, minus the offset fee,
shall be forwarded to the State to be distributed in accordance with
applicable laws and procedures.
(c) Agreements. FMS may enter into reciprocal agreements with
States for disbursing officials of FMS and any other Federal disbursing
official to offset certain Federal payments to collect past-due support
being enforced by the State. The agreement shall contain any
requirements which FMS considers
[[Page 36211]]
appropriate to facilitate the offset and prevent duplicative efforts
and shall require States to prescribe procedures governing the
collection of past-due support by Federal administrative offset. For
purposes of this section, reciprocal means of mutual benefit. An
agreement between FMS and a State to collect past-due support by
offsetting Federal payments will be considered of mutual benefit and it
is not required that States conduct administrative offsets to collect
debts owed to the Federal Government. States which have entered into an
agreement with FMS pursuant to this section may thereafter request, in
the manner prescribed herein, that an offset be performed. Such
requests shall be made by the appropriate State disbursing official
which, for purposes of this section, means an appropriate official of
the State agency which administers or supervises the administration of
the State plan under Title IV-D of the Social Security Act.
(d) Notification to FMS of past-due support. (1) States notifying
FMS of past-due support must do so in the manner and format prescribed
by FMS. States notifying HHS of past-due support must do so in the
manner and format prescribed by HHS. HHS shall notify FMS of all past-
due support referred to HHS by States for collection by administrative
offset provided that the requirements of paragraphs (d)(3) and (h) of
this section have been met.
(2) When a State has knowledge that past-due support is being
enforced by more than one State, the State notifying FMS or HHS of the
past-due support must inform any other State involved in enforcing the
past-due support when it refers the debt for offset and when it
receives the offset amount.
(3) The notification of past-due support must be accompanied by a
certification that the debt is past-due, legally enforceable, and that
the State has complied with all the requirements as set forth in
paragraph (h) of this section and with any requirements imposed by
State law or procedure. For debts so certified, the Secretary may waive
sections 552a (o) and (p) of Title 5, United States Code, where
applicable, in accordance with the Secretary's authority under 31
U.S.C. 3716(f).
(4) FMS may reject a notification of past-due support which does
not comply with the requirements of this section. The State will be
notified of the rejection along with the reason for the rejection.
(e) Minimum amount of past-due support. FMS will reject a
notification of past-due support where the past-due support owed is
less than $25.00. This amount may be adjusted from time to time by FMS
to ensure that the cost of collection does not exceed the debt.
(f) Limitations. Debts properly submitted to FMS for administrative
offset will remain subject to collection by administrative offset until
withdrawn by the State provided the debt remains past-due and legally
enforceable.
(g) Notification of changes in status of debt. The State notifying
FMS or HHS of past-due support shall, in the manner and in the time
frames provided by FMS or HHS, notify FMS or HHS of any deletion or
decrease in the amount of a debt referred for collection by
administrative offset. The State may notify FMS or HHS of any increases
in the amount of a debt referred for collection by administrative
offset provided the State has complied with the requirements of
paragraph (h) of this section with regard to those amounts.
(h) Advance notification of intent to collect by administrative
offset. (1) The State, or FMS or HHS on behalf of the State, if the
State requests and FMS or HHS agrees, shall send a written
notification, at least 30 days in advance of referral of the debt for
offset, to the individual owing past-due support, informing the
individual that the State intends to refer the debt for collection by
administrative offset against Federal payments. The notice must also
inform the individual of:
(i) The nature and amount of the debt; and
(ii) The right to an administrative review by the State referring
the debt or, upon the request of the individual, by the State with the
order upon which the referral was based, of the determination of the
State with respect to the debt and of the procedures and time frames
established by the State for such reviews.
(2) Prior to referring a debt to FMS for collection by
administrative offset, States must provide individuals with a
reasonable opportunity to exercise the rights enumerated in paragraph
(h)(1) of this section in accordance with procedures prescribed by the
State.
(i) Payments subject to offset. Federal payments subject to offset
under this section include all Federal payments except:
(1) Payments due to an individual under
(i) Title IV of the Higher Education Act of 1965;
(ii) The Social Security Act;
(iii) Part B of the Black Lung Benefits Act;
(iv) Any law administered by the Railroad Retirement Board;
(2) Payments which the Secretary determines are exempt from offset
in accordance with paragraph (k) of this section;
(3) Payments from which collection of past-due support by
administrative offset is expressly prohibited by law;
(4) Payments made under the Internal Revenue Code of 1986 (except
that tax refund payments are subject to offset under separate
authority); and
(5) Payments made under the tariff laws of the United States.
(j) Special provisions applicable to Federal salary payments. (1)
Unless a lower maximum offset limitation is provided by applicable
State law, the maximum part of a Federal salary payment per pay period
subject to offset to collect past-due support shall not exceed those
amounts set forth at section 1673(b)(2) (A) and (B) of Title 15, United
States Code, as follows:
(i) Fifty (50%) percent of the debtor's aggregate disposable
earnings for any pay period, where the debtor asserts by affidavit, or
by other acceptable evidence, that he/she is supporting a spouse and/or
dependent child, other than the former spouse and/or child for whom
support is being collected, except that an additional five (5%) percent
will apply if it appears that such earnings are to enforce past-due
support for a period which is twelve (12) weeks or more prior to the
pay period to which the offset applies. A debtor shall be considered to
be supporting a spouse and/or dependent child only if the debtor
provides over half of the spouse's and/or dependent child's support.
(ii) Sixty (60%) percent of the debtor's aggregate disposable
earnings for any pay period where the debtor fails to assert by
affidavit or establish by other acceptable evidence that he/she is
supporting a spouse and/or dependent child, other than a former spouse
and/or child for whom support is being collected, except that an
additional five (5%) percent will apply if it appears that such
earnings are to enforce past-due support for a period which is twelve
(12) weeks or more prior to the pay period to which the offset applies.
(2) The maximum allowable offset amount shall be reduced by the
amount of any deductions in pay resulting from a garnishment order for
support. Nothing in this rule is intended to alter rules applicable to
processing garnishment orders for child support and/or alimony.
(3) Federal salary payments subject to offset for the collection of
past-due support include current basic pay, special pay, incentive pay,
retainer pay, overtime, or in the case of an employee not entitled to
basic pay, other authorized pay. Aggregate disposable earnings for
purposes of determining the
[[Page 36212]]
maximum amounts which may be offset under paragraph (j)(1) of this
section is Federal salary pay remaining after the deduction of:
(i) Any amount required by law to be withheld;
(ii) Amounts properly withheld for Federal, State or local income
tax purposes;
(iii) Amounts deducted as health insurance premiums;
(iv) Amounts deducted as normal retirement contributions, not
including amounts deducted for supplementary coverage; and
(v) Amounts deducted as normal life insurance premiums not
including amounts deducted for supplementary coverage.
(4) At least 30 days in advance of offset, the disbursing official
shall send written notice to the debtor of the maximum offset
limitations described in paragraph (j)(1) of this section. The notice
shall include a request that the debtor submit supporting affidavits or
other documentation necessary to determine the applicable offset
percentage limitation. The notice shall also inform the debtor of the
percentage that will be deducted if he/she fails to submit the
requested documentation.
(k) Payments exempt from administrative offset to collect past-due
support being enforced by a State. The Secretary will exempt from
administrative offset under this part payments made under means-tested
programs when requested by the head of the Federal agency which
administers the program. For purposes of this section, means-tested
programs are programs for which eligibility is based on a determination
that income and/or assets of the beneficiary are inadequate to provide
the beneficiary with an adequate standard of living without program
assistance. The Secretary may exempt from administrative offset under
this section any other class or type of payment upon the written
request of the head of the agency which authorizes the payments. In
determining whether or not to grant such exemptions, the Secretary
shall give due consideration to whether administrative offset would
tend to interfere substantially with or defeat the purposes of the
payment agency's program.
(l) Fees. A fee which FMS has determined to be sufficient to
reimburse FMS for the full cost of the offset procedure, shall be
deducted from each offset amount. FMS will notify the States, annually
and in advance, of the amount of the fee to be charged for each offset.
(m) Conducting the offset. Disbursing officials of the Department
of the Treasury, the Department of Defense, the United States Postal
Service, or any other Government corporation, any disbursing official
of the United States designated by the Secretary, or any disbursing
official of an executive department or agency that disburses Federal
payments shall offset payments subject to offset under this section to
satisfy, in whole or part, a debt owed by the payee. Disbursing
officials shall compare payment certification records with records of
debts submitted to FMS for collection by administrative offset. A match
will occur when the taxpayer identifying number and name control of a
payment record are the same as the taxpayer identifying number and name
control of a debt record. The taxpayer identifying number for an
individual is the individual's social security number. When a match
occurs and all other requirements for offset have been met, the
disbursing official shall offset the payment to satisfy, in whole or
part, the debt. Any amounts not offset shall be paid to the payee. The
amount that can be offset from a single payment is the lesser of the
amount of the debt (including interest, penalties, and administrative
costs); the amount of the payment; or the amount of the payment
available for offset if a statute or regulation prohibits offset of the
entire amount. Debts remain subject to collection by offset until paid
in full.
(n) Priorities. When a payee owes more than one debt which has been
referred to FMS for collection by administrative offset, any offset
will be applied first to past-due support assigned to a State and will
be applied to any other past-due support after any other reductions
allowed by law.
(o) Notification of offset. Disbursing officials of FMS or any
other disbursing official which conducts an offset will notify the
payee in writing of the occurrence of the offset to satisfy past-due
support. The notice shall inform the payee of the type and amount of
the payment that was offset; the identity of the State which requested
the offset; and a contact point within the State that will handle
concerns regarding the offset. Disbursing officials shall not be liable
for failure to provide this notice.
(p) Liability of disbursing officials and payment agencies. Neither
the disbursing official nor the agency authorizing the payment shall be
liable for the amount of the administrative offset on the basis that
the underlying obligation, represented by the payment before the
administrative offset was taken, was not satisfied. Disbursing
officials will notify the agency authorizing the payment that the
offset has occurred so that the agency authorizing the payment may
direct any inquiries concerning the offset to the appropriate State.
Dated: June 30, 1997.
Russell D. Morris,
Commissioner.
[FR Doc. 97-17518 Filed 7-3-97; 8:45 am]
BILLING CODE 4810-35-P